Shell to permanently shut Philippine refinery

Shell is shutting its 110,000 b/d Tabangao refinery in the Philippines and converting the facility into an import terminal because of regional oversupply and the impact of the Covid-19 pandemic.

Fuel prices are lower than or about equal to the cost of refining crude, making it economically unviable to run the refinery, Shell's Philippine president Cesar Romero said.

The shift to an import terminal is designed to strengthen Shell's financial resilience in the Philippines, amid significant changes and challenges in the global refining industry and the "new normal" resulting from the coronavirus pandemic, the company said. It also prepares the company for a cleaner-energy future.

The Tabangao refinery has been shut since May because of a slump in demand. Philippine oil product demand fell by 20-30pc in March and 60-70pc in April, compared with February, because of local lockdowns imposed to curb the Covid-19 outbreak, according to government figures. Shell's Philippine operations made a loss of 6.7bn pesos ($137mn) in January-June, after booking a profit of P3.7bn a year earlier.

The Tabangao shutdown will leave the Philippines with only one refinery, the 180,000 b/d Bataan plant operated by private-sector local firm Petron.

By Kevin Foster